1

2

3

4

Ship owner’s obligation can be categorised under three distinct groups. Ship owner’s

obligation before commencement of the voyage, ship owner’s obligation during the

voyage (after the commencement of the voyage), and ship owners obligation after the

voyage when the ship reaches its destination.

Under the first group, ship owner's have to acquire the proper documents, to pay the port

charges for the ship sailing, to provide a seaworthy ship1 either under Common Law or

the Hague-visibly Rules, to issue to the shipper after demanding a Bill of Lading 2 Ship

owner's through the acts of their agents and servants (Stevedores who are not independent

contractors) are required to take care of cargo to load and stow it carefully and properly.3

and also to proceed to the agreed route without due dispatch.4

The second group requires ship owner's not to deviate from the agreed route unless good

reasons allow that either under the Common Law or the Hague-visby Rules.5 Ship

owners must take all reasonable care of the cargo both during the ordinary course of the

voyage and where some accidents have exposed it to danger.

Finally the third group requires ship owners when the vessel reaches its destination to

discharge the goods from the vessel properly and carefully by moving the cargo from the

hold to the ship side, to deliver them in the same order and condition in which they have

been received to the person entitled to be delivered upon representation of the Bill of

Lading, and in the case no one claiming the cargo the must allow a reasonable time to the

consignee of the cargo for taking delivery after which ship owner’s may land and

warehouse it at the consignee’s expense. In general terms ship owners must do anything

which is necessary for the performance of their contract. Exemption clauses whether

specific or general, agreed upon or introduced by the Common Law or the Hague-Visby

Rules can exempt the ship owner from their liability. Also ship owners might limit their

1 The Implied Warrant of seaworthiness can be replaced by the terms of the Bill of Lading. 2 Documentary responsibility in Article III rule – Carriage of Goods by Sea Act 1971 – which provides, “After receiving the goods into his charge the carrier or the master or agent of the carrier shall on demand of the shipper, issue to the shipper a Bill of Lading showing among other things …”. 3 Cargo Management Article III Rule 2. 4 This is an Implied Common Law obligation not to be found in the Carriage of Goods by Sea Act 1971. 5 Article IV Rule 4.

5

liability by the term of the contract or by the statute to what certain extent can they do so

and when can they rely on these exemption clauses or limitation of liability?

In this term paper I will concentrate on the basic obligation of the ship owners either

under Common Law or the Hague-visby Rules as required by the question, then I will

mention negligence on part of the ship owner or his servants.

I will also discuss exemption clauses whether contractual Common Law, statutory ones,

the limitation provision in the Hague-visby Rules either the package unit or time

limitation and when the ship owner will lose the limitation provision…

In conclusion I will try to consider the effect of not providing the basic obligation either

under Common Law or the Hague-visby Rules upon the exclusion clauses and limitation

provision.

6

A SHIPOWNER’S OBLIGATIONS

1 PROVIDING A SEAWORTHY VESSEL

In every contract of carriage there is an implied obligation if not expressly agreed upon,

that the ship owner will provide a seaworthy ship to stand the voyage.

What do we do mean by this undertaking? Does the Common Law and the Hague-visby

Rules differ in this regard? What are the tests laid down by the court to determine

whether the vessel is seaworthy or not? Upon whom does this burden rest? Can the ship

owner exclude or limit his obligation if so to what certain extent? And finally what will

be the effect of the exemption clause and limitation of liability if the ship owner did not

provide a seaworthy ship in the first place. These questions and others will be discussed.

(a) The meaning of seaworthiness (physical state of the ship)

The term seaworthiness might indicate that the ship owner has only to provide a

seaworthy vessel to stand the ordinary perils of the sea, but this is not conclusive, the term

has been widely interpreted by the judges6, and commentors.

Viscount Cave in Elder, Dempster and Co. v Paterson Zochonic and Co. Ltd. 7 said : “it

is well settled that a shipowner or charterer who contracts to carry goods by sea thereby

warrants not only that the ship in which he proposes to carry them shall be seaworthy in

the ordinary sense of the word, that is to say she will be tight stanch and strong and

reasonably fit to encounter whatever perils may be expected on the voyage, but also that

both the ship and her furniture and equipment shall be reasonably fit for receiving the

contract cargo and carrying it across the road.” Scrutton LJ’s8 argues that

seaworthiness is used in two senses.

(1) Fitness of the ship to enter on the contemplated adventure of navigation, and

(2) Fitness of the ship to receive the contemplated cargo as a carrying receptacle.

6 Defective machinery, a ship with a bullion room not reasonably fit to resist thieves, a ship without dunnage, bad stowage, all amounted to unseaworthiness. 7 [1924] AC 522 – quoted in cases and materials on the Carriage of Goods by Sea (Second Edition) by Mertin Dockrary, Cavendish Publishing Limited, 1998 8 AEReed and Co Ltd v Page, Son and East [1927] 1 KB 743, CA

7

From this we can see that the test to provide a seaworthy ship is a twofold one. The first

requires ship owners to provide a good built up ship. This does not mean that the ship

must be neither perfect nor new. If the ship is old but can stand the ordinary perils of the

sea this will suffice. The second test is “cargo worthiness” or the ability of the ship to

carry the cargo. This is an obligation on the part of the ship owner who must consider the

equipment of the vessel to the particular goods he has agreed to carry, where the contract

is for the carriage of frozen meat in a ship fitted with refrigerating machinery, there is an

implied warranty that the ship and refrigerating machinery are fit to receive and carry the

frozen meat safely on the agreed voyage9. Also, the term seaworthiness implies an

obligation on the part of the ship owner to provide sufficient and competent crew to

operate the vessel, which obviously cannot operate without human’s intervention. Also

the vessel must carry certain kinds of documents such as certificate concerning the

satisfactory state of the vessel which is related to physical condition and accordingly to

seaworthiness10.

(b) When the ship must be seaworthy?

The ship must be seaworthy at the commencement of the voyage or each voyage if the

vessel will take more than one11. This means that the ship owner’s obligation only

operates at the beginning of the voyage and if a ship owner can prove that he provided a

seaworthy ship at the beginning of the voyage he won’t be answerable to what happens

afterwards.

This proposition is enforced by the Hague-visby Rules in Article III Rule I, which makes

the carrier liable before and at the beginning of the voyage to exercise due diligence to

make the ship seaworthy.

Although the obligation to provide a seaworthy ship in Common Law is absolute, it

seems that the Hague-visby Rules and Common Law agrees that ship owners obligation

9 Cargo per Maoriking v Hughes [1895] 2 QB. 550. quoted in Carver’s Carriage of Goods by Sea

(Thirteenth Edition) by Raoul Colinvaux , London, Stevens and Sons, 1982 10 Toppfer v Tossa Marine, The Derby [1985] 2 Lloyd’s Rep. 325 11 The doctrine of stages does not apply in relation to time charter, where the ship owner is only responsible to provide a seaworthy ship at the commencement of the period of the Charter – see Carvers Carriage of Goods by Sea by Raoul Colinvaux, Stevens and Sons, 1982 ; and Tetley in Marine Cargo Claims (Third Edition), International Shipping Publication, 1988, who argues that this doctrine is no longer applicable

8

commence when the voyage begins12. Since the ship owner cannot be held liable for a

long period from the moment the vessel leaves its harbour until it reaches its destination

and the burden of proving that will be highly difficult to establish in these circumstances.

(c) Common Law/Hague-Visby Rules

The obligation to provide a seaworthy ship is absolute in Common Law. This means that

the ship owner has to provide a seaworthy ship. In fact not merely by saying that he has

taken every precaution to do so13, unless the agreement of the parties modified such

undertaking, or the Hague-visby Rules applies14. In these circumstances the obligation to

provide a seaworthy ship will be transferred from absolute to due diligence15. But what

do we mean by due diligence? Is it an easy task on the part of the ship owner or carrier

for the sake of the Hague-Visby Rules?

Tetley defines due diligence “ to make the vessel seaworthy as a genuine, competent and

reasonable effort of the carrier to fulfil the obligation, set out in sub-paragraphs (A), (B)

and (C) of Art. 3 (1) of the Hague-Visby Rules”. McKinnon LJ in Smith, Hogg and Co. v

Black Sea and Baltic General Insurance16, said “the obligation to use due diligence … to

make the ship seaworthy is a limitation or qualification more apparent than real because

the exercise of due diligence involves not merely that the ship owner personally shall

exercise due diligence but that all his servants and agents shall exercise due diligence”.

Saying that the obligation is personal on the part of the ship owner, means that the ship

owner cannot shift this responsibility by claiming that he lift the ship to his crew or to

shippers repairs. Wilson17 argues that this is an important difference between the

Common Law and the Hague-Visby Rules. In my opinion I think the mere fact that the

Common Law implies an absolute undertaking on the part of the ship owner wont let him

discharge his obligation simply by saying that he delegated such obligation to others.

12 Tetley suggests that the moment at the beginning of the voyage is when all hatches are battened down, visitors are ashore and orders from the bridge are given so that the ship moves under its own power or by tugs or both 13 Lord Blackburn in Steel v Stage (1877) 3 App. Cas. see Carver’s Carriage of Goods by Sea by Raoul Colinvaux, Steven and Sons, 1982 14 Article I (b), Article X 15 Sub-section 3 COGS Act 1971 states “There shall not be implied in any contract for the carriage of goods by sea to which the Rules apply by virtue of this Act any absolute undertaking by the carrier of the goods to provide a seaworthy ship” 16 [1939] 2 All ER 855 17 Carriage of Goods by Sea (Third Edition), John F Wilson, Financial Times Pitmans Publications 1998

9

Another distinction between the Hague-Visby Rules and Common Law is that the ship

owners can escape liability if they can prove that the actual damage or fault resulted was

neither the actual fault or privity of the carrier nor the fault or negligent of the agent.18

In both the Hague-Visby Rules and the Common Law19 the test to determine whether the

carrier or the ship owner made his ship seaworthy is to ask whether a prudent ship owner

having the same requested knowledge and experience would regard his ship to be

seaworthy in these particular circumstances. This standard required by both the Hague-

Visby Rules and the Common Law will be likely to change over the years due to the

development of human technology in relation to sea vessels and the introduction of

international new standards in the safety management code.20

In conclusion it is apparent from the case law that the burden which rests upon the ship

owner (or carrier) to exercise due diligence to make a ship seaworthy is not a light one.21

(d) The Burden of Proof

Generally in the Law of Evidence, there is a presumption that a person who wants to

assert the truth of the matter the burden of proof lies on him, accordingly the law requires

ship owners (carriers) to prove that they have exercised due diligence to make the ship

seaworthy.

The Hague-Visby Rules in Article IV Rule III provide that “whenever loss or damage

resulted form unseaworthiness the burden of proving the exercise of due diligence shall

be on the carrier or other person claiming exemption under this article”.

Different interpretation has been suggested to this article. Both Tetley and Wilson agree

that this burden shall be solely on part of the ship owner (carrier) who has all the facts

available to him and knows the condition of his ship before and at the beginning of the

voyage.22

18 This burden of proof is difficult to establish – see Article IV – (9) 19 See McFadden v Blue Star Line [1905] 1 KB 697 at 706 20 Roger White, The Human Factor in Unseaworthiness Claims [1995] LMCLQ 221 21 The Law of International Trade, D M Day, Bernadette Griffin, Butterworth, London, 1993 22 Tetley, Marine Cargo Claims, International Shipping Publications, (1988)

10

Some judgements indicate that the burden of proof rests upon the cargo claimants who

have to prove that his loss or damage is in the hands of the carrier23 Perhaps an attempt to

solve the problem by suggesting that the courts might call every party to have whatever

evidence available to him, then the court considers who is more capable of proving that

the ship is seaworthy.24

(e) Exclusion of the undertaking of seaworthiness

The first issue to consider is whether the shipowner carrier can exclude or limit his

absolute obligation to provide a seaworthy ship in common law or not? Can he also do so

under the Hague-Visby Rules where the obligation is transferred from absolute to due

diligence. If the answer is ‘yes’ can the shipowner still rely on the exemption clauses

which he has implemented in the bill of lading or the exculpatory exception offered by

the Hague-Visby Rules?25 The implied undertaking to provide a seaworthy vessel can

always be displaced by contractual clauses which will either exclude the liability of the

ship owner or to limit his liability to a certain extent. (e.g. a clause limiting the amount of

ship owner’ liability or a clause limiting the time in which claims may be brought against

them).

In Bank of Australasia and Others v Glan Line26. Pikford LJ said “There is nothing in

law to prevent a ship owner from putting an exception into his bill of lading which will

relieve him from all the consequences of unseaworthiness wherever and whenever it

exists, the only question in each case is whether he had done it or not”. But when the

court will construe these clauses in favour of ship owners and what is the effect of

incorporating a clause which is ambiguous not totally clear? The issue was considered in

this case, an action was brought by the plaintiff (endorsee of the bill of lading) to recover

damage for goods caused by failure on the part of the ship owners to provide a seaworthy

vessel. The ship owner wanted to relieve the plaintiff of their right to bring a claim

relying on a clause prohibiting bringing such claims after seven days which the plaintiffs

failed to observe, the Court of First Instance ruled that as the defendant did not provide a

seaworthy vessel the clause limiting his liability was ineffective. The Court of Appeal

23 See The Judgement of Noel J in Farrandoc (N.M. Paterson and Sons Ltd. v Robin Hood Flour Mills Ltd. [1968] 1 Ex. C.R. 175 – at p 188 – see also note (17) 24 See above note (17) 25 See article IV – Rule 2 a – g. 26 [1915] 1 KB 39

11

reached the same conclusion on different grounds that since the clause not being clear and

ambiguous offered no protection to the ship owners.27 In Kopitoff v Wilson 28 the plaintiff

sued the defendant to recover damages for the loss of a large number of iron armour

plates and bolts which were lost on the defendant ship. The plaintiff alleged that the

reason for such loss and damage was due to the ship owner not providing a seaworthy

ship. The defendant relied on the exemption offered by Common Law (Act of God,

Queen enemies …) the Court found that the plaintiff was not a common carrier therefore

he was liable and could not rely on the exemption clauses offered by Common Law.

In Rathbone Brothers and Co. v D. Maclver Sons and Co. v D. Macalver29 a wide

exemption clause was held to be not effective and did not exempt the ship owner from

liability for a damage to sheepskins. The Court of Appeal held that the last part of the

clause showed that the exceptions were not intended to extend to unseaworthiness and the

ship owner is excused only if he has taken reasonable care to prevent it30.

From the authorities mentioned and others, it is noted that the court goes with the

direction that the ship owner have to provide a seaworthy vessel before he can plead the

advantage of the exemption clauses he has agreed upon, or which the Common Law has

offered the only requirement is to use plain and clear words and the court will look at the

contract as a whole to determine whether the words are effective or not. If this is the

situation under Common Law what about the Hague-Visby Rules?

First of all, ship owner’s cannot contract out of their obligation to exercise due diligence

to make the ship seaworthy since this is a public order and any agreement otherwise will

be regarded null and void.31

In Dobell G E and Co. v Steamship Rossmore Co. Ltd.32 Lord Esher said “In section (3)

of this act so incorporated the exception which is to relieve the ship owner is made to

depend on the condition that the owner of the ship … shall exercise due diligence to make

27 Lord Mangahten in Eiderslie Steamship Company Limited v Borthwick [1905] AC 93 said “it is a wholesome rule that a ship owner who wishes to escape liability which might attach to him for sending unseaworthy vessel to sea must do so in plain words”. 28 [1876] 1 QBD 377, 381 29 [1903] 2KB 379 30 See also Rossetti [1972] 2 QB 116. 31 Reducing liability Article III Rule 8, see also Tetley see note (17) above 32 [1895] 2 QB 408

12

the vessel in all respects seaworthy. If he does not do that the exception in his favour do

not take effect”.` In Toronto Elvators Ltd. v Colonial Steamship Ltd.33 Angers J said

“The primary obligation placed upon the carrier before he can take advantage of one of

the exceptions provided by Article I rule 2 is the exercise of due diligence”. Also Lord

Somerrall declared in Maxine Footwear Co. Ltd. v Gan Government Merchant Marine34

that Article III Rule 1 is an overriding obligation if is not fulfilled and the non fulfilment

causes the damage the immunities of Article IV cannot be relied on”.

Finally we can say that the position under the Common Law and the Hague-Visby Rules

is almost identical in relation to claiming the exemption clauses or immunities.

Due diligence is a requisite. The carrier first has to exercise due diligence, then he can

claim the immunities, but can he rely on the provision relating to limitation of liability35

when he did not provide a seaworthy vessel? We will see later on that this is not totally

clear when we are considering deviation.

2 REASONABLE DESPATCH (Proceed with all convenient speed)

There is a Common Law obligation not found in the Hague-Visby Rules that shipowners

impliedly if not expressly stated, undertake that they will prosecute to the agreed

destination with utmost despatch or with reasonable time.36

In M Andrew v Adams37 the charterers and the owners of the vessel agreed that the vessel

was to proceed from Portsmouth to St Michel (in the Azores) and there to load a cargo of

fruit and return to London. The vessel, instead of going to St Michel, went to Oporto and

then to St Michel. The court held that the shipowner was liable for breach of his

obligation that the voyage shall be commenced in reasonable time. In Owner of

33 [1950] Ex CIR 375 34 [1959] A.C. 589 p 602/603 quoted in Tetley see note (17) above – In this case the court thought that in the event of a loss or damage due to fire if the operative cause is a failure to exercise due diligence to make the ship seaworthy on the part of the Carrier this exemption won’t apply”.Article IV 5 (a) Package Unit and Article III r (6) one year limit 35 Article IV 5 (a) package unit and article III r (6) one year limit 36 Section (14) of the Supply and Service Act provides “where under a contract for the supply of a service by a supplier acting in the course of business, the time for the service to be carried out is not fixed by the contract . . . there is an implied term that the supplier will carry out the service with a reasonable time” 37 [1834] I Bing NC 29 quoted in Paynes and Ivamy’s Carriage of Goods by Sea (Thirteenth Edition), E R Hardy Ivamy, Butterworths, 1989

13

Steamship Istros v Dahlstorem and Company38, an action was brought by the charterers

against the owners of the vessel alleging that the captain had failed to prosecute his

voyage with utmost despatch and they claimed damages in respect of the delay. The

owner replied that the weather was bad and relied on an exemption clause which

prevented him from liability in case of negligent or default of his servants. The judge,

Wright, J, after being satisfied that the clause was clear, found that the shipowner was not

liable for delay since no act or omission had been on his part.

In the circumstances that breach was truly established on the part of the shipowner, the

shipper is either entitled to compensation for the delay or not to regard himself bound by

any of the terms of the contract in case of frustrating object which will render the future

performance of the parties impossible.39

3 STOWAGE BELOW DECK (Cargo protection)

There is an obligation on the part of shipowners to stow goods under deck since this is the

proper place to stow them and they will not be exposed to a greater risk such as heavy

rains or high winds which might damage the goods.

If the bill of lading is silent and the parties did not agree where to stow the goods, then

shipowners are obliged to stow below deck.40 Of course, this obligation might be

modified by parties, if the shipper assented to carrying the goods on deck or the

shipowner proved a particular custom permitting carrying the goods on deck, he won’t be

liable for such breach.41

In Royal Exchange Shipping v W. J. Dixon and Co42, the indorsee of the bills of lading

brought an action against the shipowners for the value of 125 bales of cotton which had

been jettisoned, alleging that the shipowner negligently and improperly stowed the cotton

on deck. The shipowner repudiated this argument on two grounds. Firstly that a custom

38 [1930] 1 KB 39 See Carriage of Goods by Sea (Third Edition), John F Wilson, Financial Times Pitman Publishing, 1998, p 16 40 See article 3(2) of the Hague-Visby rules where there is implication that the shipowner or carrier should stow the goods under deck 41 See Carver’s Carriage by Sea (Thirteenth edition), Volume 2, by Raoul Colinvaux, Stevens & Sons, pp 858 – 862 42 [1886] 12 App. Cas.11

14

in New Orleans and of the trade in which the vessel was engaged permitted such stowage

and an exception in the bill of lading excluded the liability of the shipowner in case of

jettison of the goods. The shipowner failed to convince the court that the custom

mentioned was truly established. Lord Halsbury LC replied to the second argument “the

exception in the bill of lading of jettison cannot avail the shipowner, who broke their

contract in stowing the cotton and thereby directly caused the loss to the merchants”. The

shipowner was liable for the value of the cotton therefore. If this is the position under

Common Law which regards stowage on deck as a breach on part of the shipowner who

could no longer rely on the exclusion clauses. What about the Hague-Visby Rules, can

the shipowner rely on the limitation provision?

In the Chanda,43, an action was brought by the seller and the buyer against the

shipowners, who stowed 35 packages out of 51 on deck. The bill of lading incorporated

the Hague rules incorporated in Germany, the issue whether the admittedly unauthorised

carriage on deck disentitled the defendant from relying on any exception or limitation

provision contained in the Hague Rules. Hirst J. delivered the judgement, he held that the

limitation clause (package limitation) did not apply since these clauses protect the

shipowner provided he honour his contractual obligation to stow goods under deck. The

decision was influenced by the fact that the bill of lading was not issued in the United

Kingdom and the Carriage of Goods by Sea Act 1971 did not have the force of law.44

In the Antares45, the question arose whether shipowners were entitled to rely on the one

year time bar contained in the Hague-Visby Rules when the cargo had been carried on

deck as a result of part of the machinery being damaged in the course of the voyage.

Lloyd L. J. who delivered the leading judgement relied on the wording of Article III r6

which provides “the carrier shall in any event be discharged from all liabilities

whatsoever unless suit is brought within one year.” The Act uses the words

“whatsoever”, which means that even in a situation where there is a fundamental breach

on the part of the shipowner or carrier, he can still limit his liability in respect of the

claims brought against him.

43 WIBAU Maschinefabric Hartmen S.A. and another V Mackinon Mackenzie and Co [1989] Lloyd’s LR 424 at p 505 44 Section 1(1) of the Carriage of Goods by Sea Act 1971 45 Kenya Railways V Antares Co Pte Ltd [1987], Lloyds 424

15

Finally, it must be noted that in the event of stowing the goods on deck which the bill of

lading provided clearly that the shipowner is entitled to stow the goods on deck, the

Hague-Visby Rules will not apply to such cargo and the parties are free to negotiate their

own terms.46

4 NOT TO DEVIATE FROM THE AGREED ROUTE

Ship owners through their servants are required to proceed without deviation, but what do

we mean by deviation? When deviation is justifiable? Is there any difference between

Common Law and the Hague-visby Rules in this regard? Is a deviation a fundamental

breach of the contract which will bring the contract to an end? Can the cargo owner elect

to discharge this breach? What if a Bill of Lading has been transferred to a third party?

What’s the effect of quasi deviation? If the effect of deviation is to deprive the ship

owner from relying on the exclusion clauses why is that? All these issues and others will

be discussed under this heading.

(a) The meaning of deviation

Deviation is an unauthorised method of performing a contract straying from the usual

geographical voyage.47. English law unlike the United State Act treats deviation in a

narrow concept as any intentional and unreasonable change in the geographic route of the

voyage as contracted for48. The Hague-Visby Rules do not define deviation in any way49,

both English law and the Hague-Visby Rules refers to the word deviation as only a

change in the geographic route. The geographical route is the shortest, direct route

between the port of loading and the port of discharge. If no other route is prescribed in

the contract the ship owner is said to perform his obligation by following the ordinary

trade route or the customary route which other ship owners will follow if they take the

same voyage.

(b) Justifiable deviation

46 Article I(c) of the Carriage of Goods Act 1971 47 Does deviation still matter by Simon Bayghen [1991] 1 LMCLQ 70 48 See Tetley Marine Cargo Claims (Third Edition), International Shipping Publication, Chapter 35, (Geographic Deviation) 49 See Article IV Rule (4)

16

Although deviation is regarded as a serious breach of the contract, the law allows it for

good reasons, both the Common Law and the Hague-Visby Rules agree that deviation is

permitted in relation to saving life or to communicate with a vessel in distress in case

lives may be in danger Cockburn C J In Scaramanga v Stamp 50 said “… it would be

against the common good and shocking to the sentiments of mankind, that the ship owner

should be deterred from endeavouring to save life by the fear, lest any disaster to ship or

cargo consequent that he should be called upon to satisfy the call of humanity at his own

entire risk”. If common good and morality is the reason for permitting deviation to save

the life of humans, saving property does not stand on this footing that why Common Law

does not allow it51, on the contrary Article IV Rule (4) of the Hague-Visby Rules allows

deviation to save property or even attempting to save it, but it must be noted that

deviation to save property may be allowed under Common law when the contract

stipulates expressly so.

Also Common Law allows deviation when the voyage encounters a real danger or where

the deviation is extremely necessary for the prosecution of the voyage or for the safety of

the adventure. The Hague-Visby Rules in Article IV Rule (4) did not put a restricting

criteria for determining whether the deviation is permissible or not “… or any reasonable

deviation”, this is a matter left to the judges to decide depending on the fact and

circumstances of each case in front of them.

(c) Deviation and Fundamental breach

The obligation on the part of the shipowner not to deviate from the agreed route is either

expressly stated or implied. If the shipowner deviated from the agreed route he will be in

breach of the contract since he performed it in a totally different way than contemplated,

and this is called a Fundamental breach which goes to the root of the contract and forms

an essential part of it.

If deviation is regarded as a Fundamental breach, can the contract survive with all its

exceptions this breach? can the injured party waive this breach? and what is the effect of

his waiver?

50 [1880] 5 CPD 295, CA. quoted in Martin Dockray, Cases and Materials and the Carriage of Goods by Sea (Second Edition), Cavendish Publishing Limited, 1998 51 See the judgement of Cockburn CJ in Scaramanga v Stamp – see note 50 below

17

Two approaches were adapted by the court in construing the exception clauses which

wants to avail the party of his serious breach. The first approach (the rule of law

approach) renders all the exceptions ineffective whenever the shipowner deviated from

the contract and it was not possible by a clause, however smartly drafted, to exclude

liability for certain breaches of contract which were deemed to be fundamental.52

The second approach is the rule of construction which was laid down in Photo Production

Ltd v Securicor Transport Ltd53. The plaintiff sought to recover damages of £648,000

which occurred to his factory when the defendant employee started a fire which got out of

control and burnt down the factory. The defendant relied on an exclusion clause

prevented him from the liability of his employee. The House of Lords held that it was a

question of construction whether or not the exclusion clause covered a fundamental

breach and according to the facts the defendant was not liable because the exclusion

clause did in fact cover.54

The first approach makes the contract void55, and no more applicable even if the injured

party elected to discharge the breach. This obviously will be against the wishes of the

parties and also does not give regard to a fundamental principle of Contract Law that

parties are free to negotiate their own terms. On the other hand, the rule of construction

approach gives parties wide discretion in terms of negotiating their own terms, the injured

party can elect to waive the breach, even if it is essential and is rooted in the contract of

carriage.

In Hain Steamship Company Ltd v Tate and Lyle56, the charterer sold sugar to the

respondent and chartered a vessel from the appellant to proceed to Cuba and load a cargo

of sugar at two Cuban ports and one in San Domingo as ordered.

After loading at the first port, the vessel went to the second port in Cuba without going to

San Domingo as no order was received by the master since the message was not

52 See the judgement of Lord Denning in Karsales V Wallis [1956] 7 WLR 936,940. 53 [1980] A.C. 827 54 Contract Law, (Second Edition), Ewan McKendrick, MacMillan Press Ltd, 1994 55 See Joseph Thorley v Orchis Steamship [1907], 1 KB 661, where deviation was thought to bring the contract to an end 56 [1936] 2 All E.R. 697.

18

delivered. Soon afterwards the mistake was corrected and the master went to San

Domingo. The vessel was damaged and the sugar had to be discharged and part of it was

lost. The issue before the court was whether the charterer had waived the deviation and

what was the effect of that waiver upon the indorsee.

In this case, all the Lords agreed that in case of deviation the contract automatically will

terminate from the moment the deviation commenced and the injured party can chose

either to terminate the contract with all its exceptions or to waive the breach and treat the

contract as subsisting. In these circumstances the contract with all its exceptions will

apply and the shipowner can rely on the exceptions.

Lord Atkin said “the party affected by the breach . . . can elect to treat the contract as

ended, so he can elect to treat the contract as subsisting and if he does this with full

knowledge of his rights, he must in accordance with the general Law of Contract be held

bound.” It is submitted that the decision of the Judge is in accordance with Photo

Production v Securicor Transport57, that even if we regard deviation as a serious breach

the injured party can elect to keep the contract alive and whether an exception clause will

be effective or not is a matter of construction which the Law of Contract will solve.58

Finally, if the injured party waived the breach and treated the contract as binding, does

this affect the consignee? The position is clear in Tate and Lyle, the waiver on the part of

the charterer does not affect the consignee or indorsee to whom the bill of lading has been

transferred.59

(d) The effect of deviation

When deviation is established on the part of the shipowner who could not bring himself

under any of the Justifications which Common Law or the Hague-Visby Rules offer and

the cargo owner refused to elect to discharge this breach, if we assume that he can do so,

what will be the effect of this fundamental breach upon the exclusion clauses either

57 See note 53 above

58 ‘Does Deviation Still Matter?’ by Simon Bayghen [1991], 1 LMCL Q70 and ‘Fundamental Breach and Deviation in the Carriage of Goods by Sea’ by Charles Debattista (1989), JBL 22 59 Carver’s Carriage By Sea, Volume 2, (Thirteenth Edition), by Raoul Colinvaux, Stevens and Sons, (1982)

19

contractual, common law, or the statutory ones? Can the shipowner limit his liability

under the provision of the Hague-Visby Rules?

There is an old principle which extends to at least 200 years that a geographical deviation

will cause the shipowner to lose the benefits of the contract. An exempting and excluding

clause cannot avail the party of his guilty of breach.60

In James Morison v Shaw, Savil and Albion Company Limited61 an action was brought by

an indorsee for value against the shipowner to recover the value of lost bales of wool.

The defendant relied on an exception clause exempting him from liability in case of act of

God or King’s enemies. The plaintiff had a defence that the shipowner cannot rely on

such exemptions since he deviated from the agreed route. The court held that since

defendant when deviating broke the contract, he could no longer rely on the common law

exceptions. In Joseph Thorley62 an action was brought by the owners of the goods which

were damaged during the voyage. The shipowner relied as a defence on the exemption

clause contained in the bill of lading which exempted him from liability for loss arising

from negligence of stevedores. The court held that the shipowner cannot rely on the

exemption clause when he deviated from the agreed route. In Stag Line v Foscolo63 the

court held as the shipowners deviated from the agreed route, they could no longer rely on

the statutory immunities of Article IV Rule 2(c) of the Carriage of Goods by Sea Act

1924.64

It is clear from Stag Line v Foscolo that the position of Common Law and the Hague-

Visby Rules is the same, deviation deprives the shipowner from claiming the stipulation

in his favour (from the moment the deviation commences), but why does the law impose

such a severe result? Many explanations have been advanced, some suggest bailament65,

others alteration of risk theory, but the most acceptable explanation is that the shipowner

60 See William Tetley, Marine Cargo Claims (Third Edition), International Shipping Publications (1988), Chapters on 'Fundamental Breach’, ‘Quaid Deviation’, ‘Rupture of Contract’, p 100 61 [1916] 2 KB 783 62 Joseph Thorley Limited v Orchis Steamship Company Limited [1907] 1 KB 661. 63 [1932] A.C. 329. 64 Article IV Rule 2 states that “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (c) perils, danger and accidents by the actual fault or privity of the contract” 65 See Brian Coote, ‘The Effect of Discharge of Breach on Exception Clauses’ (1970), CLJ, p 221 at 341

20

who deviated contracted out of the voyage and out of the contract which contained the

exception he can no longer plead.66

Finally, can the shipowner limit his liability under the Hague-Visby Rules? The position

is not totally clear as far as the English law is concerned.

Scurton’s suggest that the shipowner can still rely on the limitation provision in view of

the word in any event when the bill of lading is issued in the United Kingdom and the

Carriage of Goods by Sea Act 1971 have the force of Law.67

Tetley on the other hand makes a distinction between two different situations –

unreasonable deviation to cause damage and unreasonable deviation without intent to

cause damage, but only with intent to do the act. The former situation will deprive the

shipowner from relying on the package limitation, while the latter situation will deprive

the shipowner from relying on the one-year limit.68

In my opinion it is submitted that the shipowner when he deviated from the agreed route,

he rarely if ever intends to cause damage to the cargo owner but he wants to benefit

himself instead, and if we assume that the shipowner wanted to cause damage, how can

we establish that?

I think in any event it should not mean that the shipowner (carrier) can still rely on the

limitation provision. He is in breach and he cannot take the benefit of the Hague-Visby

rules.

5 DELIVERING THE CARGO

Ship owners or their agents have to deliver the cargo in the same order and condition

which they have been received to the proper person entitled to be delivered. But when

ship owners can release themselves of this obligation? Can ship owners or their agents

66 See the judgement of Collins M.R., Fletcher, L.J., in Joseph Thorley V Orchis Steamship [1907] 1 KB 661, at 667, 669 67 Scurton on Charterparties, (Twentieth Edition) by S.C. Boyd, A.S. Burrows, D. Foxton, Sweet and Maxwell, p. 448 – 449, and a similar view, ‘Fundamental Breach and Deviation in the Carriage of Goods by Sea’, Charles Debattista [1989], JBL22 68 William Tetley, Marine Cargo Claims, (Third Edition), International Shipping Publications, 1988.

21

deliver the cargo without presentation of the Bill of Lading? If so will they be held liable

for such delivery? Can they exempt their liability? When can we say that ship owner

liability is terminated?

The traditional rule is that delivery must be made to the lawful holder of the Bill of

Lading who represent it to the ship owner agent in a reasonable time, this traditional rule

is laid down by Diplock L J in Barclays Bank Ltd. v Commissioner of Custom Excise69,

who said “it is clear law that where a Bill of Lading or order is issued in respect of a

Contract of Carriage by sea, the ship owner is not bound to surrender possession of the

goods to any person whether named as consignee or not, except on production of the Bill

of Lading”.

Ship owners, in certain situations override this traditional rule, of course they do that at

their risk, if a ship owner delivers the cargo to the first person representing an original

Bill of Lading it is said that he has satisfied his duty even later on if turned out that

another person was holding another Bill of Lading70. The Court is the proper place to

determine who should be entitled to such delivery.

Demanding an indemnity (bank or personal guarantee) is a usual practise for ship owners

in a situation where delivery is made without production of the Bill of Lading, but this

indemnity remains good as long as the financial position of the guarantor is OK and also

delivery without presentation of the Bill of Lading remains a serious breach of the

contract on part of the ship owner who is not required to do so under the Contract of

Carriage.71

Parties are free to negotiate their own terms accordingly a ship owner may incorporate a

clause which will relieve him of liability in case of negligence on part of the master who

delivered the cargo not to the proper person. The issue was considered in Sze Hai Tong

Bank v Rambler Cycle Co. 72 Lord Denning thought that the Excepting of Liability

Clause is ineffective since the obligation on part of the ship owner is essential and goes to

the root of the contract and the ship owner can not simply contract out of it, but this

69 [1963] 1 Lloyds Rep. 81, 88. Please see note (3) a below 70 See Glyn v East and West India Dock Co. (1882) 1 Ap. 71 ‘The presentation Rule revisited’, John F. Wilson, [1995] LMCQ 289 72 [1959] A.C. 577 : [1959] 2 Lloyds Rep. 114, quoted in Wilson article. See note 71 above

22

approach (the rule of Law Approach) as stated earlier is no longer acceptable after the

land mark decision in Photo Production Ltd. v Securicor 73 transport which established

that now it’s a matter of construction whether an excepting clause will be effective or not.

Finally we can say that the liability of the ship owner shall cease when goods are no

longer in his possession. If the ship owner or his agent delivered the goods to the person

entitled to be delivered, or if the ship owner warehoused the cargo after waiting a

reasonable time when nobody is claiming the goods74. From this moment on we can say

that ship owners have satisfied their obligation and they are no longer answerable to the

cargo owner or the consignee. But it must be noted that this is a matter for the parties to

decide and can be modified by the custom applicable in the place of delivery.

73 [1980] A.C. 827 – see also note 71 74 Please see Payne and Ivamy, Carriage of Goods by Sea (Thirteenth Edition), Butterworth, 1989

23

B NEGLIGENCE

There is some form of connection between negligence on the part of the ship owner or his

servants or master and the obligations discussed earlier such as seaworthiness and

deviation. Negligence on the part of the ship owner will usually but not necessarily

constitute unseaworthiness. If a ship owner employed a master who is not competent

either by his knowledge or experience this as stated earlier will constitute

unseaworthiness and will render the ship owner liable. But what do we mean by

negligence? Can the ship owner draft wide clauses to exempt his liability in case of

negligence on his part or his servants and agents? What is the effect of negligence on the

exemption clauses incorporate? Is it the same as the effect of a breach of the undertaking

of seaworthiness?

Negligence is defined as the breach of duty to take care that it is imposed by either

Common Law or Statute75. Three essential requirements must be present in order to be in

negligent conduct. A duty of care which is implied in the Contract of Affreightment that

the ship owner use due care and skill in navigation of the vessel and in carrying the

goods, a breach on part of the ship owner who will be contracted with other ship owners

and a resulting damage which will compensate the cargo owner in case of breach on part

of the ship owner.

The ship owner may contract out of his obligation not to be held liable in case of

negligence as other exclusion clauses76. The court is suspicious to it, will construe it

very carefully, and in case of ambiguity, the court will be likely to construe it against the

person claiming it.

The effect of negligence on the ship owner’s liability is the same as the effect of breach of

the undertaking of seaworthiness which will deprive the ship owner from relying on the

75 Charles Worth and Percy on Negligence, London, Sweet and Maxwell, (1997): “negligence is also defined as a tort which involves a person breach of duty that is imposed upon him to take care resulting in damage to the complaint”. See also Lord Denning in Lochgelly Iron and Coal v M’Mulan [1934] A. C. where he said “negligence is the Failure to use the requisite amount of care required by law in the case where a duty of care exists” – see also the unfair contract term 1977 in S1 (1) 76 See Canada Steamship Lines v The King [1952] A.C. 192 – quoted in Scurton on Charter Parties,

London, Sweet and Maxwell, (1996)

24

exemption clauses if negligence was established and attributed directly to the loss or

damage occurred to the shipper or cargo owner.

In Dunn v Bucknall Brothers77. A case related to a breach of duty by the ship owner who

promised to deliver the goods at a certain time. The ship owner failed to do so as a result

of permitting to load enemies’ goods, which were liable to confiscation. the ship owner

wanted to rely on the exemption clause contained in the Bill of Lading, which will

exempt him. For loss or delay occasioned by restraint of princes, the court held that as a

result of negligence on part of the ship owner he could not rely on the exemption clause,

consequently he was made liable.

The next issue to discuss is what is the consequence of negligence on the part of the

Carrier. Who is claiming the advantage of the immunities contained in the Hague-visby

Rules 78? Can he still claim them in case of negligence on his part? The issue was

considered in Silver v Ocean Steamship Co. Ltd. 79, the case concerned a claim brought by

a cargo owner against a ship owner in respect of damage to the cargo resulted from the

negligence on part of the ship owner. The ship owner relied on the Hague-Visby Rules

Insufficiency of Packing. Answering the question Lord Career J said “the exception of

Insufficiency of Packing which was incorporated in the Bill of Lading by reference to the

rules contained in Carriage of Goods by Sea 1924 will not protect the ship owner in case

of negligence”.

It is noted the Carriage of Goods by Sea Act 1971 makes a distinction between two forms

of negligence, the first related to negligence in the navigation or management of the ship

and negligence not in the navigation or management of the ship80. The carrier can be

relieved from the former but not the latter81. Navigation or management of the ship is not

defined in the act nor defined in any previous ones but judicial interpretation might help

in determining whether negligence is due to management of the ship or not.

77 [1907] 2KB. 614, quoted in Carver’s Carriage by Sea Vol. (1), London, Stevens and Sons, (1982) 78 Article IV (2) a – 9. 79 [1930], KB. 416, quoted in Carver’s Carriage by Sea Vol. (1), London, Stevens and Sons, (1982) 80 Article IV Rule 2 states “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (a) act negligent or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship 81 Scurton on Charter Parties (Twentieth Edition), S.C. Boyd, A.S. Burrows and David Foxton, London, Sweet and Maxwell, 1996

25

If the loss or damage caused by negligence of the ship owner or carrier himself not of his

servants, the ship owner or carrier can not in these circumstances rely on the immunities

offered by the Hague-visby Rules82

In conclusion we can sum up that negligence on part of the ship owner if proved will

deprive him from relying on the exemption clauses which he has incorporated in the

contract of affreightment and according to Hague-Visby Rules if the ship owner wants to

rely on the immunities offered he must prove that he was not negligent or that the loss is a

result of neglect on part of his servants or agent in the navigation of the ship.

82 Article IV Rule 2.

26

C LIMITATION OF SHIPOWNER LIABILITY

The extent of a shipowner’s liability cannot be absolute, certain limitation must be on the

obligation of the shipowners in relation to sea carriage. A shipowner’s liability can be

limited to a certain extent either by the agreement of the parties or under the Hague-Visby

Rules and the Merchant Shipping Act 199583 which implemented the 1976 International

Convention on limitation of liability for maritime claims.

a) Limitation of liability under the Hague-Visby Rules

When the Carriage of Goods by Sea Act 1971 has the force of law,84 the shipowner’s

liability will be limited according to the rules of the Act. Limitation provision can be of

two kinds in respect of package or unit limitation and the one-year bringing claims. I

shall discuss every one individually.

(i) Package or unit limitation

Shipowners or carriers are entitled to limit their liability in respect of the damage

or loss to the goods carried on their ships in an amount exceeding 666.67 units of

account per package or unit or 2 units of account per kilogram of gross weight85

The protection does not apply if the damage resulted from an act of negligence on

the part of the shipowner or omission of the carrier done with intent to cause

damage or recklessly and with knowledge that damage would probably result or at

least might result.86 Parties may agree to exceed the amount fixed by the Act

either by a declaration of the nature and value of the shipped goods by the shipper

before shipment and the insertion of the declaration in the bill of lading87 and any

clause, convenant, agreement attempting to reduce the liability of the carrier

below these limitations provided by the Act will be declared null and void.88

83 The First Limitation Act 1733 mentioned the rationale behind such provisions : “it was of the greatest consequence and importance to this Kingdom to promote the increase of the number of ships and vessels to prevent any discouragement to merchants . . . which will necessarily tend to the prejudice of the trade and the navigation of this Kingdom”. See also Ships are Different : the Case for Limitation of Liability, David Steel (1995), LMCLQ 77 84 Section 1 (I) of the Carriage of Goods by Sea Act 1971 85 Article IV, 5(a) 86 Article IV, 5(e) 87 Tetley, W, Marine Cargo Claims (Third Edition), Blais (1988) 88 Article III, Rule 8

27

(ii) Time Limitation

The other form of protection offered to shipowners or their agents is notice of

claims and time limits of claims for loss or damage of goods. A notice in writing

should be handed in to the carrier or his agent and the suit should be brought

within a year after the delivery of the goods, or in case of non-delivery, the date

when they should have been delivered.89 The reason for that is a two-fold one.

First of all, the carrier cannot be held liable for more than one year since the legal

positions should be settled after such a period of time has elapsed. Also in terms

of evidence, parties might lose whatever documents they have to represent in

courts, and this is an attempt by the authors of the Hague-Visby Rules to speed up

the process of the Courts in looking and settling marine cargo claims.90 A clause

introduced by the shipowner reducing his liability in terms of bringing claims

against him will also be declared null and void since this is a public order and the

Hague-Visby Rules provides the maximum protection for shipowners and

carriers.91

b) Limitation of Liability under the Merchant Shipping Act 1995

Shipowners92 can limit their liability according to the Merchant Shipping Act 1995,

notwithstanding the provision of the Hague-Visby Rules93 in respect of claims which are

not excepted from limitation94 brought against him or his vessel, for loss of life or

personal injury or loss or damage to property, loss resulting from delay in the carriage by

sea of cargo passengers or their luggage, or loss resulting from infringement of rights

other than contractual rights, and claims in respect of the raising, removal, destruction or

the rendering harmless of the cargo of the ship.95 In the circumstances it appears that the

loss resulted from personal act or omission of the shipowner committed with intent to

89 Article III, Rule 6. 90 Wilson, J, Carriage of Goods by Sea (Third Edition), Financial Times Pitman, 1998 91 Article III, Rule 8 92 Section 185 (5) of the Merchant Shipping Act 1995 defines owners as any part-owner and any charterer, manager or operator of the ship 93 Article VIII of the Hague-Visby Rules provides “the provision of these rules shall not affect the rights and obligations of the carrier under any statute for the time being in force relating to the limitation of the owner’s of a seagoing vessel” 94 Schedule 7 – Convention on Limitation of Liability for Maritime Claims 1976 – Article 3 – Claims excepted from liability. 95 Article 2 – Claims subject to limitation 1 (a – f).

28

cause such loss or with knowledge that such loss would probably result, shipowners

cannot protect themselves under the provisions of this Act.96

Shipowners can limit their liability in respect of claims for loss of life or personal injury

in two situations : for a ship not exceeding 2,000 tons (2 millions unit of account) or for a

ship exceeding 2,000 tons (from 30,001 – 70,000 tons 600 units, below 30,000 – 800

units – more than 70,000 – 400 units)97, or in respect of passengers’ claims which will be

limited to 175,000 units of account98 multiplied by the number of passengers which the

ship is authorised to carry according to the ship’s certificate99. Limitation of liability can

be either without100 or with constitution of the Fund101 by depositing the sum or by

producing a guarantee acceptable under the legislation of the state party where the Fund is

constituted and considered to be adequate by the Court or other competent authority102,

the Fund shall be distributed among the claimants in proportion to the established claims

against the Fund.103

96 Article 4 – Conduct barring limitation – the burden of proving the misconduct on the part of the shipowner is upon the person making the claims 97 This is a new version of the convention which the 1996 protocol replaces – see Article 6, paragraph 1 and Part II – provisions having effect in connection with convention – the general limits 5(1) – (3) 98 Article 8 provides that the unit of account is the special drawing right as defined by the International Monetary Fund . . .” 99 The 1996 protocol increased the unit of account and deleted the cap of 25 million units – see also Dockray, M, Cases and Materials on the Carriage of Goods by Sea (Second Edition), Cavendish Publishing Limited, 1998 100 Article 10 101 Article 11(1) – Constitution of Fund – shall be available only for the payment of claims in respect of which limitation of liability can be invoked 102 Article 11(2) 103 Article 12 (1)

29

CONCLUSION

As we have seen, Common Law and the Hague-Visby Rules imply certain obligations on

the part of the shipowner to provide a seaworthy ship, not to deviate from the agreed

route, to stow goods below deck. These basic obligations are very fundamental to

perform the contract of carriage and if the shipowner does not fulfil these basic

obligations, he is regarded in breach of contract of carriage.

Exclusion clauses and contractual limitation of liability, whether attempting to relieve or

lessen the shipowner from his liability in respect of damage or loss to the cargo, were

given effect when they were used in their proper purpose, where the parties are free to

negotiate their own terms. But these clauses became soon after very severe in their effect

(e.g. clauses exempting shipowners from liability of their servants and agents in case of

negligence on their part, clauses exempting their liability in case of fundamental breach).

Also they became a way of harassment by the shipowners who occupied a strong

bargaining position against the shippers, the weaker party in the society who did not have

any choice but to accept the shipowner’s terms. The social and legal harmless function of

these exclusion clauses which became thereafter lead to the intervention of the legislator

either on the domestic (unfair contract terms 1977) and international level (Hague Rules)

to make the balance again between the interests of the carriers and shippers, trying to put

a limit to these wide exclusion clauses.104 But did the legislator succeed in his task ?

The Hague Rules and their successors, the Hague-Visby Rules, were surely one of the

ways adopted to provide a clear and fair balance between right and responsibilities of

carriers and shippers. Looking throughfully to the provisions of the rules, it is apparent

that shipowners dominant power influenced the authors of the Rules through

incorporating a wide range of immunities and limitation provisions commonly used in

carriage contracts.105 But when shipowners can take advantage of these immunities and

limitation provisions, the position under Common Law is identical to the Hague-Visby

Rules in respect of the exception, the carrier has to come to the court with clean hands,

doing what he is required to do under the contract. If he fulfils his obligations, then and

104 Contract Law by Ewan McKendrick (Second Edition), MacMillan Press Ltd, 1994 105 Tetley, Marine Cargo Claims (Third Edition), International Shipping Publications, p. 839

30

only then he can rely on the immunities and exceptions offered by the Common Law or

the Hague-Visby Rules.

The position of the limitation provision in the Hague-Visby Rules is not totally clear. The

carrier can be discharged from liability in respect of claims brought against him, even in

the situation that he did not provide a seaworthy ship or deviated from the agreed route in

view of the word ‘whatsover’, while he cannot take advantage of the package or unit

limitation when he did not perform his obligation.

Until clear interpretation of the wording of the Act106, what the authors of theHague-

Visby Rules had in mind when they drafted these provisions, I can say that the shipowner

is in breach of his obligations and he cannot rely and take the advantage of the Hague-

Visby Rules.

106 Article III Rule (6), Article IV Rule (5)(a).